The new web 3.0, also known as the metaverse, is offering an exciting new mix of opportunities to meet, travel, work and learn. But it is the metaverse’s real estate that is grabbing people’s attention as prices for digital land and real estate have risen sharply.
Although the metaverse is infinite and hence the value of ‘land’ there should not be the subject of appreciation, this is nevertheless what has been happening. Are people piling in because of FOMO? Or are those actively trading properties in the metaverse simply more visionary than the rest of us?
Cryptocurrencies, and the blockchain technology that underpins them, form the basis of many ‘realities’ in the metaverse, including property transactions. Ethereum, other than being a cryptocurrency, is also the platform enabling blockchain technology and where transactions, in the form of Non-Fungible Tokens (NFTs), can be registered. Blockchain was originally developed as a virtual bank for cryptocurrencies, but now allows anyone to register ownership of any type of virtual asset, be it a drawing, an article, a video game, a virtual dress or a piece of real estate.
Ethereum, as the mothership of Blockchain, is also the platform powering Decentraland. Decentraland is a virtual space/country/community, owned by all its users. Land in Decentraland is a community owned good, held in a Blockchain ledger of land parcels of about 52.5 square feet each. Users can buy ownership of a parcel of land, which will give the user full control over what content is published on their parcel and allow the user to build anything to their liking on it. Much like in the real world.
Virtual land requires payment with a cryptocurrency and on Dencentraland this is MANA (CRYPTO MANA). Crypto currencies need to be held in a digital wallet outside the metaverse (for example on Coinbase) and will then have to be connected to it. When ‘opening’ your wallet, aka your virtual bank account, you get assigned a seed phrase. Do write this down the old-fashioned way as losing the seed phrase and access to your ‘wallet’ is the equivalent of losing all your digital assets.
Buying property can be done inside the metaverse, i.e. you enter into Decentraland or SandBox and have a look around. You can see who your neighbours will be and what the nearby amenities are. Snoopp Dog, for example, has built a mega-mansion in Sandbox and his property is hard to miss when opening the SandBox land map. However, if being in the metaverse is not your ‘thing’, you can also buy outside using third-party platforms such as NonFungible.com or Open Sea. They quote prices for parcels across various platforms and quote in real money $ terms as well as in crypto.
Once you have selected your parcel, have agreed on a price and have funded the transaction through your wallet, the only thing to do is click on it and boom, you bought it. Like anything on Amazon. The blockchain verification and transaction recording take about a minute and then the parcel is truly yours; you hold the NFT title to this parcel. In your wallet. Easy-peasy.
That buying virtual land is a growing trend is clear. The highest value transaction was for a series of plots (116 in total) by Tokens.com in November 2021 for $2.43 million in MANA. The buyer stated it would use the parcels in the heart of Decentraland’s Fashion Street to expand it digital fashion range. That transaction valued the price per square foot in Decentraland at $400 and hence lifted the price of a single parcel to $21,000. Compare this to the parcel price of $2,703 in March 2021 and you will see how rewarding these investments are. (Note that this is partially due to the increase in value of crypto currencies vs the USD in 2021.)
So, if you believe that the metaverse will be its own, big, economy, getting a parcel of land today might make a good investment. And who would not want to become the virtual neighbour of Snoop Dogg on Sandbox and get exclusive access to some of his epic, virtual, house parties? Well, if that does not convince you…..
Recommended links:
https://www.youtube.com/watch?v=WD38OueA5zk
https://www.coinbase.com/price/decentraland
https://nonfungible.com/market/history/decentraland
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